NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Interim Guidelines for Standardizing Local Exchange Company Responses to Customer Contacts Alleging Unauthorized Changes to the Customer's Telecommunications Service Provider and Unauthorized Charges Added to the Customer's Bill; Doc. No. M-00981063 Commissioners present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; David W. Rolka; Nora Mead Brownell
[28 Pa.B. 3176] Public Meeting held
June 4, 1998
Tentative Order By the Commission:
Over the last year, hundreds of residential customers have filed informal telecommunications industry-related complaints with the Commission regarding certain practices identified as ''cramming'' and ''slamming.'' As a result of this situation, the Commission is proposing to adopt interim guidelines pending the promulgation of formal regulations to standardize local exchange company responses to customer contacts alleging unauthorized changes in telecommunications service providers and unauthorized billing charges.
Cramming
As recently as September, 1997, Pennsylvania telecommunications customers began filing informal complaints with the Commission's Bureau of Consumer Services (BCS) regarding non-usage related charges on a telephone bill. These complaints involve the appearance of unclear, invalid or possibly fraudulent billing charges. Customers allege that their telephone bills do not clearly state what service was provided and, in many cases, that they are being billed for services they did not order. This practice has come to be known as ''cramming.''
Local exchange companies (LECs) serve as billing agents for many facilities-based interexchange carriers or interexchange resellers (IXCs) and information service providers. Invalid charges can occur when an IXC or an information service provider sends inaccurate billing data through to the LEC. The LEC then bills the customers for the calls or services, whether the error is intentional or unintentional. Unclear charges can also occur when an IXC or an information services provider legitimately imposes a charge, but either insufficiently or improperly describes the service for which the customer is being billed.
Examples of the ''cramming'' complaints include the following:
1. charges for calls that were not made by the customer or that were placed to toll-free numbers;
2. charges for telecommunication products or services that are explained only in general terms, such as ''paging,'' ''voicemail,'' ''calling plan,'' or ''calling card;''
3. charges for club memberships such as pyschic clubs, personal clubs or travel clubs;
4. charges identified only as ''monthly fee'' that appear on a recurring basis.
Many cramming scams occur through use of an 800 number while others are initiated by contests or sweepstakes.
In the majority of the cramming complaints investigated by BCS, there is a third party involved. The IXC or information services provider uses a billing clearinghouse or a billing aggregator that has a billing contract with the local exchange company. These billing layers add to the complexity of the situation for the customer and for those investigating cramming complaints since the aggregator will also have to be contacted to question the charge.
Furthermore, the problem that may occur with investigating informal complaints is that the customer cannot even identify what the charge is, let alone whether it originated within the state. Many customers will still complain to BCS after the charge is removed or credited. The essence of these informal complaints is that the charges appeared on the bill in the first place, which may involve a Section 1501 violation of the Public Utility Code.1
Section 1501 of the Public Utility Code requires a public utility operating within the Commonwealth to provide reasonable and adequate service. Clearly, a utility providing facilities-based or reseller interexchange services cannot be providing reasonable and adequate service if it is not issuing accurate bills or is fraudulently billing customers. While the goal of guidelines proposed in the order is to implement an interim procedure which, inter alia, provides some immediate relief for the customer, designates responsibility and reduces informal complaints, any allegation which involves a Section 1501 violation may still be pursued by the customer or the BCS.2 However, the Commission is proposing that LECs, as well as BCS, should respond to these types of complaints as set forth in proposed Interim Guidelines following as Appendix A.
Essentially, the Interim Guidelines propose that the LEC respond to a cramming complaint by 1) recoursing the charge, 2) instructing the billing clearinghouse, IXC or the information service provider to prevent further billing of that charge or type of charge to this customer's account, 3) informing the customer that the billing entity may attempt to use other methods to collect the charges, including a collections agency, and 4) informing the customer of the right to pursue a complaint against the provider of the service or charges by contacting the Pennsylvania Office of Attorney General (OAG), the Federal Communications Commission (FCC) or the Federal Trade Commission (FTC), depending upon the type of service or charges under dispute.
At the Federal level, the FCC and the FTC are working jointly to address the problem. According to general consumer information provided by the FCC, if a company will not remove incorrect charges from a consumer's telephone bill, the consumer can file a complaint with the proper regulatory agency. The FCC describes the following jurisdictional separation of complaints:
State Regulatory Commission: calls placed to a location within the state or telephone services provided within the state.
Federal Trade Commission: charges on the telephone bill for non-telephone services (for example ''content'' services like psychic hotlines).
FCC: charges on the telephone bill for interstate or international calls or services.
We recommend that LECs voluntarily implement, as Interim Guidelines, the procedures set forth in Appendix A when responding to customer contacts alleging cramming. These procedures focus on that portion of the consumer's complaint over which the Commission clearly has jurisdiction--the billing and collection that the LEC provides on a contractual basis for the IXCs.3 The procedures are intended to reduce the need for customers to seek Commission intervention to resolve cramming complaints.4 The responsibility for resolving the complaint is placed on the party (IXC, information service provider or billing clearinghouse) responsible for the charge, as well as on the LEC that inadvertently aided the cramming by placing the charges on the customer's bill. The procedures benefit the customer by requiring the LEC to immediately remove the unauthorized charges from the customer's bill, and by requiring the billing clearinghouse, IXC or information service provider to take steps to prevent further billing of that charge or type of charge on the customer's account. The procedures also require notice to the customer about contacting the FCC and FTC. In cases where the charge is not a telephone charge and the complainant alleges the charge is fraudulent, the LEC would also instruct the complainant about how to contact the OAG. Finally, by paying attention to the number of complaints involving a particular billing clearinghouse, IXC or information service provider with whom they have a billing contract, the LECs can make modifications to their billing contracts, perhaps in some cases even canceling the contract.
This document is being issued as a tentative order, and the Commission is interested in receiving comments on the extent of our jurisdiction over complaints which involve cramming of telephone related charges or service and non-telephone related charges or service. We are also interested in comments that address the Commission's authority to order LECs to recourse the charges to the information service provider and what effect billing contracts may or may not have on this authority. Another issue we are particularly interested in is our authority to order LECs to ''flag'' an account at the request of a customer so that no future billing or charges can be placed on the account. We are specifically interested in determining whether the commenting parties perceive ''flagging'' an account for telephone related services as anticompetitive in violation of the Telecommunications Act of 1996 (TA-96). Finally, we seek comments on the type of complaints that should be referred to the OAG, FCC and FTC.
Slamming
The Commission has likewise experienced a substantial increase in the number of informal complaints regarding unauthorized changes of a customer's IXC, a practice commonly known as ''slamming.'' The FCC established safeguards to prevent slamming when equal access was implemented in 1985.5 As the number of IXCs increased, the FCC responded by implementing procedures to verify PIC6 -change orders generated by telemarketing agreements.7 Based on even more consumer complaints regarding slamming, the FCC established additional safeguards to deter misleading letters of agency (LOAs) evidencing that a particular carrier has been selected by the customer.8 Moreover, a Further Notice of Proposed Rulemaking at CC Docket No. 94-129 sought comments on modifying the FCC's rules to implement Section 258(a) and (b) of TA-96, which statutorily prohibited any ''telecommunications carrier'' from changing a subscriber's exchange service or toll service except in accordance with the verification procedures, and set forth the liability for charges for violating the verification procedures, respectively. The FCC intends to assess whether existing safeguards are adequate in the new competitive market.9
Whereas a Federal statute and regulations exist which are intended to prevent slamming, similar legislation does not exist in Pennsylvania. However, there are bills pending in both the House and Senate; House Bill No. 1572 would establish Pennsylvania's verification procedures for changing a long-distance carrier or LEC,10 whereas Senate Bill No. 1091 directs compliance with the FCC's verification procedures, sets the liability for the carrier responsible for the slam, and creates reporting requirements.
Just as the FCC has experienced an increase in slamming with the advent of competition in the telecommunications industry, the Commission has also had to address this situation in the toll markets. In Pennsylvania, the Commission's BCS has procedures for handling informal complaints alleging slamming. Essentially, the BCS focuses on dealing with the customer's local exchange company--the company that makes the switch and usually is responsible for rendering the bill. The primary actions that BCS requests from the local exchange company in cases where a customer files an informal complaint alleging an unauthorized switch of his or her IXC are as follows:
1. reconnect the customer to the long-distance company chosen by the customer before the slamming occurred;
2. offer to ''flag'' the customer's account by placing a ''Don't Touch'' indicator on the account alerting LEC employes that verbal authorization is needed from the customer of record or the customer's designee before any changes to the account can occur;
3. adjust all charges for switching long-distance companies.
The BCS also attempts to resolve billing issues relating to any unauthorized toll charges. In cases where the BCS investigator is unable to reach the company that did the slamming, or if that company refuses to rerate the disputed calls, the investigator contacts the customer's LEC and requests that the LEC recourse the charges back to the unauthorized company. The BCS has encountered instances with certain LECs refusing to recourse toll charges on the grounds that their contracts with the IXC prohibit recourse. Given our lack of jurisdiction over a carrier's failure to comply with FCC verification procedures and our belief that the party responsible for the complaint should resolve the complaint, not the LEC, we find that guidelines similar to those proposed for cramming should be recommended to handle slamming complaints. Therefore, the Commission also proposes the slamming guidelines set forth in Appendix A and recommends that LECs voluntarily implement these procedures as Interim Guidelines in response to slamming complaints.
Again, these procedures focus on the Commission's jurisdiction over the customer's complaint--the billing and collection that the LEC provides on a contractual basis for the IXCs. These procedures are also intended to reduce the need for customers to seek Commission intervention to resolve a slamming complaint. By having the LEC place the responsibility for resolving the complaint on the IXC, the party responsible for the problem will have to expend time and effort to resolve the matter, as opposed to the LEC and the BCS. Moreover, the procedures benefit the customer by the immediate removal of charges from the customer's bill, and by offering to ''flag'' the account to prevent a recurrence of slamming. Although the charges are removed from the LEC bill, they are not necessarily eliminated. These procedures also require that the customer be provided with important consumer information relating to contacting the FCC and OAG.
While the proposed Interim Guidelines will not eliminate instances of slamming, they do provide important consumer protections which we believe do not cross the ''anticompetitive'' line. We suggest that these guidelines are not anticompetitive because they limit the protection against slamming to those customers who have been improperly switched and wish to prevent a recurrence. In fact, current switching protocols will not be affected except for the switching of customers who have been slammed in the past. Implementation of these guidelines will result in the immediate resolution by the LEC of the billing portion of the customer's dispute without the need for Commission intervention; of course, the Commission has jurisdiction over the billing portion of the customer's dispute.11 52 Pa. Code §§ 64.1, et seq.
We seek comment on whether the Commission has the authority to order a LEC to rebill the unauthorized charges based on the rates charged by the customer's presubscribed carrier, even where the IXC or LEC refuses the recourse of the toll charges. We also seek comment on whether the Commission has the authority to order LECs to ''flag'' all slammed residential accounts so that LEC employes must obtain verbal or written authorization from the customer of record or the customer's designee before making any further changes to the account.
Conclusion
We are hereby proposing by this Tentative Order Interim Guidelines to be in effect pending the promulgation of final regulations at a separate docket. These guidelines, when finalized after the receipt of public comment, are intended to provide guidance to jurisdictional utilities when handling customer contacts involving cramming and slamming complaints.
The cramming and slamming guidelines proposed require notice to the customer of the right to contact the OAG. We believe that it is beneficial, especially when two agencies have dual jurisdiction over certain subject matter, to have an executed Memorandum of Understanding (MOU) between the agencies. An MOU is intended to establish protocols whenever the Commission or the OAG receive a cramming or slamming complaint. The interagency protocol procedures should maximize the ability of the OAG and the Commission to obtain effective and adequate relief on behalf of customers; Therefore,
It is Ordered That:
1. Voluntary Interim Guidelines attached to this Tentative Order are hereby proposed to help standardize local exchange company responses to customer contacts alleging unauthorized changes to the customer's IXC and unauthorized charges added to the customer's bill. These, once finalized, are intended to remain in place pending the conclusion of a formal rulemaking to promulgate mandatory regulations.
2. This Tentative Order, including Appendix A, be published in the Pennsylvania Bulletin.
3. Interested parties may submit written comments, an original and 15 copies, within 20 days from the date the notice is published in the Pennsylvania Bulletin, to the Office of the Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. A copy of written comments shall also be served upon the Commission's Bureau of Consumer Services and upon the Law Bureau.
4. Copies of this order shall be served upon all jurisdictional local exchange telephone utilities, the Office of Consumer Advocate, the Office of Small Business Advocate, and the Pennsylvania Telephone Association.
5. The Law Bureau initiate and execute on behalf of the Commission a Memorandum of Understanding with the Office of Attorney General.
6. The contact person for this matter is Terrence Buda, Law Bureau (717) 787-5755.
JAMES J. MCNULTY,
Secretary
Appendix A
Interim Guidelines for Standardizing Local Exchange Company Responses to Customer Contacts Alleging Unauthorized Changes to the Customer's Long Distance Carrier and Unauthorized Charges Added to the Customer's Bill Definitions
Cramming--The practice of billing a customer for telephone or nontelephone related services or products the customer did not knowingly authorize, order or use.
Service provider--Facilities-based interexchange carrier or interexchange reseller or information service provider initiating the service or charges.
Slamming--A term used to describe the unauthorized changing of a customer's telecommunications provider, whether for local exchange service, intraLATA toll or interLATA toll.
Billing Information
(A) Cramming. Upon contact from the customer alleging that cramming has occurred on the bill rendered to the customer by the local exchange carrier, it is recommended that the local exchange carrier shall do the following:
(1) Identify the charge(s), and clarify that the customer's complaint is that the customer did not authorize the charge(s) or order or use the services or products associated with the charges;
(2) Inform the customer that the charge(s) will be removed from the local exchange carrier bill and recoursed to the service provider or its billing agent;
(3) Inform the customer that the local exchange carrier will instruct the billing agent and/or service provider to take the steps necessary to prevent any further billing of those charges or types of charges to the customer's account;
(4) Inform the customer that removal of the charge(s) from the local exchange carrier bill does not guarantee that the service provider or its billing agent will not use other collection remedies, including direct billing of the recoursed charge(s) or use of a collection agency;
(5) Provide adequate notice of a customer's right to pursue the complaint against the service provider or billing agent by contacting the Pennsylvania Office of Attorney General, the Federal Communications Commission and the Federal Trade Commission; and
(6) Maintain for a minimum of 2 years records of the customer complaints of cramming in order to monitor adherence to the terms of the billing contract the local exchange carrier has with the service provider and/or billing agent relating to cancellation of the contract for excessive cramming complaints.
(B) Slamming. Upon contact from the customer alleging that slamming has occurred on one or both of the past two bills rendered to the customer by the local exchange carrier, regardless of dates of calls, it is recommended that the local exchange carrier shall do the following:
(1) Identify the name of the IXC, isolate the charge(s) and clarify that the customer's complaint is that the customer did not authorize the switch to this IXC;
(2) Offer to restore the customer's account, at no charge, to the IXC the customer had received service from prior to the unauthorized switch, and to place a safeguard on the customer's account to prevent the local exchange carrier from processing an IXC request for a switch without the local exchange carrier obtaining express authorization from the customer;
(3) Inform the customer that the charge(s) will be removed from the local exchange carrier bill and returned to the IXC or its billing agent;
(4) Inform the customer that the local exchange carrier will instruct the IXC and/or billing agent to take the steps necessary to prevent further billing to the customer's account;
(5) Inform the customer that removal of the charge(s) from the local exchange carrier bill does not guarantee that the IXC or its billing agent will not use other collection remedies, including direct billing of the recoursed charge(s) or use of a collection agency;
(6) Provide adequate notice of a customer's right to pursue a complaint against the IXC and/or billing agent by contacting the Federal Communications Commission and/or the Pennsylvania Office of Attorney General.
(7) Maintain for a minimum of 2 years records of the customer allegations of slamming in order to monitor adherence to the terms of the billing contract the local exchange carrier has with the IXC and/or billing agent relating to cancellation of the contract for excessive slamming complaints.
[Pa.B. Doc. No. 98-1077. Filed for public inspection July 2, 1998, 9:00 a.m.] _______
1 66 Pa.C.S. § 1501.
2 BCS is the bureau established by statute to investigate consumer complaints against public utilities. 66 Pa.C.S. § 308(d). The Commission has delegated its authority to initiate proceedings against public utilities which are prosecutory in nature to BCS and other bureaus with enforcement responsibility. Delegation of Prosecutory Authority to Bureaus with Enforcement Responsibilities, M-00940593 (order entered September 2, 1994).
3 52 Pa. Code, Chapter 64. Standards and Billing Practices for Residential Telephone Service.
4 As just explained in this order, the customer can still pursue the complaint process against the IXC or the information service provider based on unreasonable and inadequate service. 66 Pa.C.S. § 1501.
5 Allocation Order, 101 FCC 2d 911 (1985), recon. denied, 102 FCC 2d 503 (1985).
6 Presubscribed Interexchange Carrier.
7 Policies and Rules Concerning Changing Long Distance Carriers, CC Docket No. 91-64, Report and Order, 7 FCC Rcd 1038 (1992) recon. denied, 8 FCC Rcd 3215 (1993); 47 CFR §§ 64.1100 and 64.1150.
8 Policies and Rules Concerning Unauthorized Changes of Consumers Long Distance Carriers, CC Docket No. 94-129, Report and Order (1995).
9 Further Notice of Proposed Rulemaking and Memorandum Opinion and Order on Reconsideration, CC Docket No. 94-129 (Released July 15, 1997).
10 Recently, a state court in Minnesota struck down a similar state statute citing Congress' preemption over slamming through enactment of Section 258 of the Act.
11 Just as with cramming, our jurisdiction over slamming extends to the IXC. The unauthorized change of a customer's IXC would subject the company to a Section 1501 violation of the Public Utility Code.
No part of the information on this site may be reproduced for profit or sold for profit.This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
